The failure of Soldily

On 6 January 2022, Andre Cronje introduced a new AMM model inspired by OHM and Curve — ‘Solidly’. This model did not bring anything particularly groundbreaking to the table but rather introduced an improved tokenomics model - ve(3,3). The game theory behind the new model would allow the participants to self-optimize the AMM, which would not lead to the dumping of the platform’s governance token.

Solidly Model key characteristics:Locking: Lock SOLID for a period of time to receive veSOLID. Different lock lengths result in different amounts of veSOLID (max lock to gain the max amount of veSOLID). Benefits of veSOLID include:

i) Trading fees from pools that have been voted for, paid in base assets;

ii) Portion of weekly SOLID emissions;

iii) Voting power on AMM pools;

iv) Boosted rewards based on the user’s veSOLID balance and LP position.

Emissions: Solidly includes weekly token emissions, but the amount changes depending on the % of SOLID tokens locked. If all the circulating SOLID tokens were to be locked in veSOLID, then there would be no emission. This is important as lockers never get diluted.

Trading fees: All trading fees go to SOLID lockers and only from pools they voted for. Fees are paid in base assets (underlying pool assets). The platform maintains a 0.01% fee.

Bribes: The concept of bribes was popularized by Convex, which controlled a large share of Curve's voting power.

• Protocols realized they could bribe veCRV holders to vote for their pools to grow their protocols and on-chain liquidity.

• On Solidly, anyone can award bribes to a gauge and those who vote for it can claim them.

• Solidly also introduces the concept of negative voting, which allows users to prevent emissions from going to a pool.

With Solidly, Andre Cronje created a new base-layer AMM inspired by OHM and Curve. The AMM would reward pool voters with trading fees, which would help direct liquidity to where it is needed (based on fees).

At first, due to the novel ve(3,3) mechanism, Solidly attracted a large amount of liquidity to Fantom, but due to the vicious competition of APR and the withdrawal of Andre himself, the Solidly project finally failed. In addition to the withdrawal of the founder himself, the failure of Solidly is also related to its own mechanism: Andre once mentioned when creating ve(3,3): The best performance indicator of a DEX is trading fees because it shows what people are paying to use the platform, it's cost-prohibitive to the game and doesn't make sense to, since all the eyes are on TVL & Volume, which can be easily gamed. However, due to the existence of bribery and the distribution of incentive tokens being still determined by the size of the user's liquidity position, Solidly ve(3,3) did not realize Andre's initial vision, that is, the amount of trading fee generated determines how much to reward. This also led to the vicious APR competition in the later stage of Solidly, which eventually led to the project's failure.